Sabre Insurance Group Plc · LSE:SBRE
Sabre Insurance — FY2022 Earnings Presentation
34 slides from Sabre Insurance's earnings presentation, March 2023
Slide 1: Full-year results
Full-year results 31 December 2022
Slide 2: Presenters and Q&A
Presenters and Q&A Geoff Carter Adam Westwood CEO CFO Trevor Webb Matt Wright Claims Director Chief Actuary 2
Slide 3: Today's agenda
Today’s agenda 1 Overview and introduction Geoff Carter 2 Financial results Adam Westwood 3 Sustainability and responsibility Adam Westwood 4 Strategic highlights Geoff Carter 5 Summary and outlook Geoff Carter 6 Q&A All 3
Slide 4: Overview and introduction
Overview and introduction ‒ Identified high inflation quickly and took rapid pricing and reserving action ‒ Returned to growth in 2022, driven by Motorcycle and Taxi business ‒ Underwriting profit achieved despite strain on loss ratio ‒ Strong capital position allows payment of final dividend ‒ Posi
Slide 5: Financial results for the year ended 31 December 2022
Financial results for the year ended 31 December 2022 Adam Westwood
Slide 6: Results summary
Results summary FY 2022 financial performance NET LOSS RATIO % FY 2022 FY 2021 68.7% Gross written premium £171.3m £169.3m 51.5% 51.1% 48.6% Net earned premium £153.2m £145.4m 2019 2020 2021 2022 Combined ratio 96.0% 79.4% Investment return £1.4m £1.2m EXPENSE RATIO % Adjusted profit before tax £12.
Slide 7: Underwriting performance
Underwriting performance Overall current-year net Prior-year net loss ratio loss ratio 5.0% 4.3% 80.0% 4.0% 67.3% 68.4% 70.0% 3.0% 60.0% 2.0% 50.0% 1.0% 40.0% 0.0% 30.0% -1.0% 20.0% -2.0% 10.0% -3.0% (2.8%) 0.0% -4.0% H1 2022 H2 2022 H1 2022 H2 2022 ‒ Exceptional increase in inflation impacted acros
Slide 8: Underwriting performance
Underwriting performance 2022 Net Earned Premium By Product Motor, the largest product line, has performed well in Motorcycle the market context 10% Motorcycle and Taxi form a relatively small part of Taxi 3% book Performance for Motorcycle and Taxi business worse than planned, with some expec
Slide 9: Increasing rates to maintain profitability
Increasing rates to maintain profitability We have increased Motor prices by over 30% since January 2022, and 50% since January 2020 Quarterly Cumulative Motor Rate Change 60% 50% Cumulative rate change 40% 30% 20% 10% 0% Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 D
Slide 10: Conservative approach to risk
Conservative approach to risk ‒ Investment portfolio includes: Investment portfolio breakdown UK Government bonds Other government backed assets UK Government High quality corporate bonds bonds 61.3 87.2 Government- ‒ No realised loss across portfolio in £m backed securities 2022 80.8 Corporat
Slide 11: Dividend and capital generation
Dividend and capital generation ‒ We continue to benefit from strong profitability and an efficient capital model ‒ Year-end solvency pre-dividend ratio of 161% ‒ Dividend policy is to pay an ordinary dividend of 70% of profit after tax ‒ Special dividend reflects return of excess capital, with reta
Slide 12: IFRS 17
IFRS 17 ‒ Expect low impact on earnings in future years ‒ Will apply full premium allocation approach ‒ Intend to defer underwriting and selling costs ‒ Discounting of claims liabilities likely consistent with peers ‒ Relatively small impact on opening balance sheet, reduction in IFRS net assets exp
Slide 13: Sustainability and responsibility
Sustainability and responsibility Adam Westwood
Slide 14: Driving down our carbon footprint
Driving down our carbon footprint ‒ Have maintained our net-zero ambition Operationally carbon Net-zero emissions by neutral by 2030 2050 ‒ Sabre generally well-insulated from short and medium term risks ‒ Strategic challenge to address risks presented by long-term transition to low- carbon economy
Slide 15: Strategic highlights
Strategic highlights Geoff Carter
Slide 16: Looking back on 2022
Looking back on 2022 ‒ A challenging year with an extraordinary rapid increase in inflation ‒ We made an early call and took an assertive rating response ‒ Good Motor loss ratio in year – albeit poor by our own standards ‒ Motorcycle and Taxi launched, reviewed and evolved ‒ Both products experience
Slide 17: The Motor insurance market in 2022
The Motor insurance market in 2022 Premium pricing ‒ Market loss ratio pain during 2022 impacted by residual effects of over- discounting during COVID-19 and beyond ‒ Some in the market may have over-discounted for benefits from whiplash reforms and post-COVID-19 frequency benefits ‒ Have seen signs
Slide 18: Motorcycle and Taxi
Motorcycle and Taxi ‒ In-year performance for the early stage Motorcycle and Taxi business was below expectation due to inflation, and ‒ some large losses causing greater drag that expected on Taxi, with low earned premiums ‒ higher Motorcycle loss ratio on business written prior to our more sophist
Slide 19: Cost inflation during 2022 and beyond
Cost inflation during 2022 and beyond 2022: c.12% 2023: c.10% ‒ Shows little sign of reducing Parts ‒ Running at c.10% ‒ Continue at c.10% on medium term inflation ‒ Parts availability increases Paint ‒ Up to15% during 2022 ‒ Continue at c.15% during 2023 inflation Claims inflation ‒ With increase i
Slide 20: Strategic developments in 2023
Strategic developments in 2023 ‒ Expect to deploy a new direct platform in mid 2023. Primary focus is to migrate the majority of customer interactions on-line and re-invest savings into price ‒ Initial roll-out of Insurer Hosted Pricing (‘IHP’) mid-year, which will allow us to avoid ‘software house’
Slide 21: What might happen?
What might happen? Possible positive factors ‒ Under-pricing by some competitors in prior periods bites ‒ Rational market pricing ‒ Inflation softens Challenges ‒ Competitor Market exits ‒ Sabre: Insurer hosted pricing ‒ Some competitors lose discipline to chase volumes ‒ Sabre: New direct platform
Slide 22: Our people and customers
Our people and customers Our people ‒ Continue to benefit from very low staff turnover, and have been recruiting into areas to support future developments ‒ Have continued to pay bonuses in 2022 (albeit at reduced levels) and have sought to assist with the increasing ‘cost of living’ with additional
Slide 23: Our people and customers
Our people and customers Our customers ‒ Look to improve customer service through enhanced technology ‒ Processes to identify customer vulnerabilities, including where this relates to increased cost of living, and adapt processes appropriately ‒ Continue to experience very low levels of complaints a
Slide 24: Summary and outlook
Summary and outlook Geoff Carter
Slide 25: Looking forward
Looking forward ‒ Whilst managing the impacts of inflation, we have also focused on developments to drive future success ‒ Maintaining price discipline means we continue to anticipate growth as the market hardens and we do not need to increase prices by the same extent ‒ Recent 2023 volumes are enco
Slide 26: Outlook
Outlook Premium volume The year so far ‒ Motor - Q1 2023 premium up on Q4 2022, with accelerating volumes in recent weeks ‒ Motorcycle - strong start to the year after a seasonally lower Q4 2022 and high renewals following high volume of premium in Q1 2021 ‒ Taxi - Q1 2023 volumes expected to be at
Slide 27: Outlook
Outlook Other income ‒ Increase in investment return due to strengthening reinvestment yield Combined operating ratio ‒ Expect improved loss ratios on Motor, Motorcycle and Taxi business ‒ Anticipate some deterioration in expense ratio in 2023 due to earned premium increase falling behind cost infla
Slide 28: Q&A
Q&A Geoff Carter, Adam Westwood, Matt Wright, Trevor Webb
Slide 29: Appendices
Appendices INSURANCE
Slide 30: Reconciliation to KPIs
Reconciliation to KPIs Gross earned premium 2022 2021 2020 £’k £’k £’k Gross written premium 171,257 169,322 173,235 Movement in unearned premium reserve 6,918 (3,426) 12,527 Gross earned premium 178,175 165,896 185,762 Adjusted Profit Before Tax 2022 2021 2020 £’k £’k £’k Profit before tax 12,750 3
Slide 31: Reconciliation to KPIs
Reconciliation to KPIs Net Loss Ratio 2022 2021 2020 £’k £’k £’k Net insurance claims 112,799 81,015 88,110 Less: Claims handling expenses (7,613) (6,767) (7,637) Net claims incurred 105,186 74,248 80,473 Net earned premium 153,218 145,442 165,707 Net loss ratio 68.7% 51.1% 48.6% Expense Ratio 2022
Slide 32: Reconciliation to KPIs
Reconciliation to KPIs Solvency Coverage Ratio – Pre‐Dividend 2022 2021 2020 £’k £’k £’k Solvency II net assets 91,191 110,114 122,500 Solvency capital requirement 56,516 52,955 60,327 Solvency coverage ratio – pre‐dividend 161.4% 207.9% 203.1% Solvency Coverage Ratio – Post‐Dividend 2022 2021 2020
Slide 33: Reconciliation to KPIs
Reconciliation to KPIs Dividend payout ratio 2022 2021 2020 £’k £’k £’k Adjusted profit after tax 10,107 30,140 39,798 Dividend declared in respect of the financial year 11,250 32,500 53,000 2019 deferred special dividend ‐ ‐ (13,000) Effective dividend declared in respect of the financial year 11,2
Slide 34: Disclaimer
Disclaimer LEGAL NOTICE This presentation has been prepared to inform investors and prospective investors in the secondary markets and other market participants about Sabre Insurance Group plc and its subsidiaries (the "Group") and does not constitute an offer of securities under any applicable legi